AB 1393, as introduced, Committee on Insurance. Workers’ compensation: studies.
Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of his or her employment.
Existing law requires the Commission on Health and Safety and Workers’ Compensation to undertake a specified study examining the causes of the number of insolvencies among workers’ compensation insurers between the calendar years of 1998 and 2008, to be conducted by an independent research organization, and requires the commission and the Department of Industrial Relations, no later than July 1, 2009, to publish the report of the study on its Internet Web site and to inform the Legislature and the Governor of the availability of the report.
Existing law requires the administrative director to begin a study, on or before July 1, 2003, of medical treatment provided to workers who have sustained industrial injuries and illnesses, and to report and make recommendations, based on the results of the study, to the Legislature, on or before July 1, 2004.
Existing law requires the administrative director, after consultation with the Insurance Commissioner, to contract with a qualified organization to study the effects of the 2003 and 2004 legislative reforms on workers’ compensation insurance rates, and requires the administrative director to submit the final study on or before January 1, 2006.
This bill would repeal these workers’ compensation study requirements.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 77.7 of the Labor Code is repealed.
(a) A study shall be undertaken to examine the causes
3of the number of insolvencies among workers’ compensation
4insurers within the past 10 years. The study shall be conducted by
5an independent research organization under the direction of the
6commission. Not later than July 1, 2009, the commission and the
7department shall publish the report of the study on its Internet Web
8site and shall inform the Legislature and the Governor of the
9availability of the report.
10(b) The study shall include an analysis of the following: the
11access to capital for workers’ compensation insurance from all
12sources between 1993 and 2003; the availability, source, and risk
13assumed of reinsurers during this period; the use of deductible
14policies and their effect on solvency regulation; market activities
15by insurers and producers that affected market concentration;
16activities, including financial oversight of insurers, by insurance
17regulators and the National Association of Insurance
18Commissioners during this period; the quality of data reporting to
19the commissioner’s designated statistical agent and the accuracy
20of recommendations provided by the commissioner’s designated
21statistical agent during this period of time; and underwriting, claims
22adjusting, and reserving practices of insolvent insurers. The study
23shall also include a survey of reports of other state agencies
24analyzing the insurance market response to rising system costs
25within the applicable time period.
26(c) Data reasonably required for the study shall be made
27available by the California Insurance Guarantee Association,
28Workers’ Compensation Insurance Rating Bureau, third-party
29administrators for the insolvent insurers, whether prior to or after
P3 1the insolvency, the State Compensation Insurance Fund, and the
2Department of Insurance. The commission shall also include a
3survey of reports by the commission and other state agencies
4analyzing the insurance market response to rising system costs
5within the applicable period of time.
6(d) The cost of the study is not to exceed one million dollars
7($1,000,000). Confidential information identifiable to a natural
8person or insurance company held by an agency, organization,
9association, or other person or entity shall be released to researchers
10upon satisfactory agreement to maintain confidentiality.
11Information or material that is not subject to subpoena from the
12agency, organization, association, or other person or entity shall
13not be subject to subpoena from the commission or the contracted
14research organization.
15(e) The costs of the study shall be borne one-half by the
16commission from funds derived from the Workers’ Compensation
17Administration Revolving Fund and one-half by insurers from
18assessments allocated to each insurer based on the insurer’s
19proportionate share of the market as shown by the Market Share
20Report for Calendar Year 2006 published by the Department of
21Insurance.
22(f) In order to protect individual company trade secrets, this
23study shall not lead to the disclosure of, either directly or indirectly,
24the business practices of a company that provides data pursuant
25to this section. This prohibition shall not apply to insurance
26companies that have been ordered by a court of competent
27jurisdiction to be placed in liquidation under the supervision of a
28liquidator or other authority.
Section 127.6 of the Labor Code is repealed.
(a) The administrative director shall, in consultation
31with the Commission on Health and Safety and Workers’
32Compensation, other state agencies, and researchers and research
33institutions with expertise in health care delivery and occupational
34health care service, conduct a study of medical treatment provided
35to workers who have sustained industrial injuries and illnesses.
36The study shall focus on, but not be limited to, all of the following:
37(1) Factors contributing to the rising costs and utilization of
38medical treatment and case management in the workers’
39compensation system.
P4 1(2) An evaluation of case management procedures that contribute
2to or achieve early and sustained return to work within the
3employee’s temporary and permanent work restrictions.
4(3) Performance measures for medical services that reflect
5patient outcomes.
6(4) Physician utilization, quality of care, and outcome
7measurement data.
8(5) Patient satisfaction.
9(b) The administrative director shall begin the study on or before
10July 1, 2003, and shall report and make recommendations to the
11Legislature based on the results of the study on or before July 1,
122004.
13(c) In implementing this section, the administrative director
14shall ensure the confidentiality and protection of patient-specific
15data.
Section 138.65 of the Labor Code is repealed.
(a) The administrative director, after consultation with
18the Insurance Commissioner, shall contract with a qualified
19organization to study the effects of the 2003 and 2004 legislative
20reforms on workers’ compensation insurance rates. The study shall
21do, but not be limited to, all of the following:
22(1) Identify and quantify the savings generated by the reforms.
23(2) Review workers’ compensation insurance rates to determine
24the extent to which the reform savings were reflected in rates.
25When reviewing the rates, consideration shall be given to an
26insurer’s premium revenue, claim costs, and surplus levels.
27(3) Assess the effect of the reform savings on replenishing
28surpluses for workers’ compensation insurance coverage.
29(4) Review the effects of the reforms on the workers’
30compensation insurance rates, marketplace, and competition.
31(5) Review the adequacy and accuracy of the pure premium rate
32as recommended by the Workers’ Compensation Insurance Bureau
33and the pure premium rate adopted by the Insurance Commissioner.
34(b) Insurers shall submit to the contracting organization premium
35revenue, claims costs, and surplus levels in different timing
36aggregates as established by the contracting organization, but at
37least quarterly and annually. The contracting organization may
38also request additional materials when appropriate. The contracting
39organization and the commission shall maintain strict
40confidentiality of the data. An insurer that fails to comply with the
P5 1reporting requirements of this subdivision is subject to Section
211754 of the Insurance Code.
3(c) The administrative director shall submit to the Governor,
4the Insurance Commissioner, and the President pro Tempore of
5the Senate, the Speaker of the Assembly, and the chairs of the
6appropriate policy committees of the Legislature, a progress report
7on the study on January 1, 2005, and July 1, 2005, and the final
8study on or before January 1, 2006. The Governor and the
9Insurance Commissioner shall review the results of the study and
10make recommendations as to the appropriateness of regulating
11insurance rates. If, after reviewing the study, the Governor and the
12Insurance Commissioner determine that the rates do not
13appropriately reflect the savings and the timing of the savings
14associated with the 2003 and 2004 reforms, the Governor and the
15Insurance Commissioner may submit proposals to the Legislature.
16The proposals shall take into consideration how rates should be
17regulated, and by whom. In no event shall the proposals unfairly
18penalize insurers that have properly reflected the 2003 and 2004
19reforms in their rates, or can verify that they have not received any
20cost savings as a result of the reforms.
21(d) The cost of the study shall be borne by the insurers up to
22one million dollars ($1,000,000). The cost of the study shall be
23allocated to an insurer based on the insurer’s proportionate share
24of the market.
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